1. Western Balkans and Europe 2020
Does the Western Balkan need a new Growth Model?
Peter Sanfey
Lead Economist, EBRD
Regional Coordination Meeting, Regional Cooperation Council
Brussels, March

2. The “growth model” of the Transition Region (incl
The “growth model” of the Transition Region (incl. the Western Balkans):
Market-oriented reforms
Trade integration
Financial integration with the West
Political integration (for EU or near-EU countries).
Rapid catch up and growing prosperity
But also important weaknesses and gaps

3. Is a new approach to development needed after the crisis?
The EBRD answer in a nutshell
No new “growth model” needed, but region must address its key weaknesses
Need both stronger and safer growth
New reform agenda
Close sector-level reform gaps
Develop local currency finance
Strengthen export capacity
Improve business environment

4. Weakness (1): Incomplete Reforms

5. Weakness (2): Financial Sector Fragility

6. Weakness (3): Unbalanced Growth

7. Exports ► Innovation ► Growth
Firm level R&D Spending
Export activity significantly raises probability of R&D
≈1/3
Non-exporter
Exporter

8. Top priorities to improve export-friendliness

9. Weakness (4): persistent business environment problems
BEEPS: Top three constraints in each country